By Aman Thakker —
Status: Not Started — The Fair Compensation in Land Acquisition, Rehabilitation, and Resettlement Act, 2013 requires that states obtain approval from at least 80 percent of residents before buying land; making it difficult to find plots for industry and infrastructure.
High Difficulty: Legislation, With Opposition — Land acquisition is an extremely tricky political subject and attempts to relax rules on acquiring land have been criticized as anti-farmer and anti-poor. With the government not yet holding a majority in India’s upper house, progress on any new law replacing the 2013 Land Acquisition Act will be difficult.
This is the third installment in a new series of articles on the India Reforms Scorecard: 2019-2024 by the staff and experts at the Wadhwani Chair in U.S.-India Policy Studies. The series seeks to provide analysis on why reforms marked as “Incomplete” or “In Progress” have not been completed, and the impact such reforms can have on specific sectors or the economy at large.
During the 2014 general elections, the Bharatiya Janata Party (BJP) led by Narendra Modi bemoaned the “opacity of the land acquisition process,” and promised a series of new reforms on national land use. As Prime Minister Modi took office, observers reiterated the need for “sweeping land reforms”, and welcomed the promise of the prime minister’s commitment to the issue. However, despite high hopes and expectations, Prime Minister Modi has entered his second five-year term with his efforts in land reforms insufficient.
The Need for Reform
Land reforms are crucial as Modi looks to fulfill his promises under his “Make in India” plan to create millions of manufacturing jobs in India. Indeed, the program calls for a transformation of India “into a global design and manufacturing hub.” However, India’s onerous land regulations have been preventing progress on this front.
The head of India’s Confederation of Indian Industry recently said that “The private sector is finding it extremely difficult to get land for projects.” Companies had specifically pointed to the United Progressive Alliance government’s 2013 Land Acquisition Act as the cause for making land acquisition in India “virtually impossible.” This act included strict provisions regarding consent of landowners, assessing the social impact of any proposed project, and limitations on acquiring irrigated multi-cropped land. The managing director of Hindustan Construction Company said that, under the law, “it would take 58 months (to acquire land) — if everything went right”. He went on to say that with “the usual bureaucratic delay it will easily double that.”
Unsuccessful Efforts and Dashed Hopes
When Prime Minister Modi took office, he inherited the 2013 Land Acquisition Act, which he saw as a direct challenge to his development agenda. Especially the hurdles in this act that make it difficult to foster the creation of a strong manufacturing base in India. The 2013 act overturned an 1894 land acquisition law which had previously allowed the government to assume any land it wanted, even without consent of the private landowner. While the 1894 act had its flaws, the 2013 Land Acquisition Act heavily restricted the government’s power, making it almost impossible to acquire land for any reason.
While the 2013 law was challenged by land owners in the courts, the Supreme Court of India dismissed these challenges and confirmed the law’s constitutionality in 2014. Prime Minister Modi, therefore, has to go through parliament to amend or repeal the 2013 act. In his government’s first attempt to do so, the BJP argued that amending the law was in the national interest, noting that the law’s empowerment of landowners made acquiring land more difficult for the center. However, this attempt sparked an almost-immediate nationwide backlash labeling the bill as anti-farmer. Without other options, Modi used his executive power for changing the 2013 law through an ordinance. The ordinance was promulgated twice, until it lapsed on August 28, 2015.
In May 2015, the Modi government made another amendment attempt with the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Bill. This bill would have enabled the center to exempt five specific categories from the social impact assessment requirement, the multi-cropped land restrictions, and the consent regulation for private and public private partnership projects. The definitions of these categories were intentionally left vague to give Prime Minister Modi’s new powers more flexibility. However, without the necessary support, the bill failed to pass the upper house, thereby halting all progress on land reforms.
Despite complaints from the private sector and Modi about India’s onerous and time-consuming land acquisition process, India has made little progress on making it easier to acquire land in India. However, if India would like to take advantage of shifting global supply chains, and achieve its vision of development and job creation led by a strong manufacturing base, it will need to simplify its rules on land acquisition.
Mr. Aman Y. Thakker is an Adjunct Fellow (Non-resident) with the Wadhwani Chair in U.S.-India Policy Studies at CSIS and the J.B. and Maurice C. Shapiro Scholar at St. Antony’s College at the University of Oxford. Follow him on twitter @AmanThakker.